22 oktober 2008

Many years ago when I was in law school, I listened to a talk by a fellow student on antitrust law. Right at the beginning of his presentation, he earnestly stated that the antitrust laws were a “charter of freedom.” I was probably the only person in the room who winced. That “charter of freedom” line is an item of faith among most people (and nearly all lawyers) who have been told that antitrust laws protect companies - and thereby consumers - from the monopolistic designs of greedy business tycoons. The reason I winced was that I knew that line is nonsense. As an undergraduate I had read Dominick Armentano’s iconoclastic book, The Myths of Antitrust, and understood that antitrust, far from protecting freedom, is an assault on it. Armentano subjected to withering analysis the naïve belief that antitrust law is necessary to the preservation of free markets. Had my classmate read that book, he would have known how foolish his remarks were.

Since Armentano’s seminal work, there have been other scholarly critiques of antitrust. The most recent is Edwin Rockefeller’s “The Antitrust Religion”. Rockefeller has impeccable credentials to write such a book. He is a lawyer who has served on the staff of the Federal Trade Commission, chaired the American Bar Association’s antitrust section, and taught at Georgetown Law School. Instead of writing the kind of book you might expect from someone with that background - a dense treatise with in-depth analysis of dozens of cases - Rockefeller has given us a concise book that anyone can easily read. He doesn’t try to cover all the many erroneous doctrines of antitrust, but only to prove his thesis that “antitrust is not consistent with our aspirations for a rule of law.” And why is that? Rockefeller explains, “[A]ntitrust enforcement is arbitrary political regulation of commercial activity, not enforcement of a coherent set of rules.” That is to say, antitrust is the rule of men, not of laws.

Coming back to the book’s title, Rockefeller argues that antitrust has all the trappings of a religion. It’s accepted as a matter of faith and is built around a number of myths. The central myth is one blindly accepted by almost all educated Americans. They have heard that the evil Standard Oil Company had a virtual monopoly in the oil business, causing government authorities to break up the gigantic, dangerous firm. If you believe that, the rest of the antitrust catechism falls neatly into place: We need government officials to constantly monitor business activity and to stop the ever-present threat of monopoly.

Rockefeller shows that the accepted Standard Oil tale is as baseless as a Halloween scare story. During the time of Standard’s supposed market dominance, the price of refined petroleum products continually fell and competitors - yes, there were quite a few - steadily chipped away at Standard’s market share. There was no problem. The antitrust religion thrives on false history and encourages confused thinking. True believers call for antitrust enforcement to prevent the kinds of competitive “injury” that is inevitable under capitalism. “Belief in antitrust,” Rockefeller writes, “is based on a kind of competition in which some win but none lose.”

But why does our author contend that antitrust is not really “law” at all? Because true law must be knowable so people can adjust their behavior in order to avoid legal difficulties. Antitrust, however, is so vague that people can never be certain that they won’t be prosecuted for “attempted monopolization” whenever they compete vigorously. The rule of antitrust authorities is like that of a capricious dictator. Rockefeller is absolutely correct that antitrust is not compatible with the rule of law. It was America’s first instance of law so vaguely written that people didn’t know what it meant. Unfortunately, since then it has been joined by others, as politicians enact legislation that in effect says to bureaucrats and judges, “Here are a few broad objectives - now you figure out what to do to achieve them.”

Despite his solid case that antitrust is wasteful and counterproductive, Rockefeller holds out no hope that we will escape from its clutches. The religion is just too deeply ingrained, and opinion leaders see it as a component of “social justice.” And even if we somehow repealed the antitrust statutes starting with the Sherman Act, that might make things worse because of the existence of the Federal Trade Commission, which has been invested with broad, open-ended powers to regulate business “for the public interest.” That’s just as vague as a statute that makes it illegal to “attempt to monopolize.” The only way to root out the antitrust religion is to teach people the truth about capitalism.